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A Year performance of present gold trading contract:

The gold performance is better as compare to 2010, The last year Average price is Rs19640 but

it was moved to 21000 Rs during 2011. The yearly performance of gold is analyzed by taking

consideration of present contract trading in the Bullion market.

-Contract Expiry Date:- 5t

April2011 Contract Expiry Date:- 4t

June2011

Contract Expiry Date:- 5th

Agust2011 Contract Expiry Date:- 5th

October 2011

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Analysis of present trading contract yearly movement:-

The yearly movement of gold is influenced by various factors mainly core price drivers of Gold,

like inflation, interest rate, the dollar value or other. This core price driver largely changes during

12 month gap period and also the number of factors effecting on commodity market is varies.

Some of important gold market moving factors are as follows.

Tightening of gold supplyGold mining is decreasing and the demand for gold is increasing. Gold supply has decreased by

almost 40 per cent as the cost of mining, legal formalities and geographical problems have

increased which has led to a fall in gold mining. Economics have taught us that lesser the supply,

greater the demand and in turn greater the increase in price.

Lowering interest rates increases gold prices as gold becomes a better investment option vis-a-

vis debt products that earn lower interest. Gold loses its shine in a rising interest rate scenario.

Geo-political concernsWhenever there is geo-political strife, investors around the world rush to prevent erosion of their

investments and gold as a safe haven attracts one and all. For example after terror strike in the

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United States the demand for gold had increased. With the recent events like tension between

India-Pakistan, Israeli strikes over Gaza, the ongoing war in Iraq, the tension between US and

Iran coupled with recession have investors scrambling for gold.

Central bank demandWith the dollar losing its value, central banks of most of the developed countries have started to

increase their share of gold. This explains the increasing market demand for gold.

Weakness in financial marketsGeneral rule of thumb in the market is that gold is always attractive when all other investments

are unattractive. Why is this? As gold is negatively co-related to stocks, bonds, and real estate,

gold is considered to be a safe haven and hence during any crises, investors would like to sell off

what they would term as risky investments and be invest the funds in gold.

Huge purchasing habit by chinaChina is adding to their reserve of gold. It has been well known that China is trying increase the

amount of gold that they hold so for that reason alone the price of gold has gone up. They are

pushing for their citizens to invest or buy more gold and they need to be sure that they have an

excess amount of gold in stock to meet their demands. They hold the title for the most populated

area so their demand for gold is much higher than any other area.

Positive response to Portugal PM words:-The gold price reacted positively to the Portuguese auction, rising to its new record high. Later in

the day, Portugals Prime Minister, Jose Socrates, announced that the nation requested financial

assistance from the European Union. The price of gold again responded favorably, rebounding

from its intra-day low.

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Interpretation:-

In the mid 2010 the price of gold is Rs 18,000 but at the end of 2010 the market crosses Rs

21,000. The price movements of different trading contract are not moved in the same manner

mainly because of different maturity period. Each contract is affected by different price drivers

based on the expiry date of contract. As compare to last year the movement of gold price is in

positive way. The economy is in the recovery stage of great 2007-2008 depression so it indicator

to development of the economy.

Gold guinea:-

Gold Guinea is a coin that was minted in the United Kingdom between 1663 and 1813, originally

worth one English Pound sterling and weighing around 8.3-8.4 grams. The name was derived

from Guinea in Africa, from where most of the gold used to make these coins originated. In the

India context, Gold Guinea refers to 8 gram gold coins of atleast 0.995 purity, which are mainly

utilized as a retail investment. The demand for gold coins for retail investment is estimated to be

around 35 tonnes in India and this is expected to grow at a rate of 40% in the coming years.

Performance of Gold guinea:-

The last month (March) performance of gold guinea can be understand by analyzing the gold

guinea trading chart.

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Contract Expiry Date:- 31st

March 2011 Contract Expiry Date:- 30th

April 2011

Contract Expiry Date: - 31st

May 2011

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Analysis of Gold Guinea Monthly trading chart:-

As compare to gold, the market performance of gold guinea is not so familiar even though it has

equal value of gold main. It has high volatility in the beginning of the month, at the month mid

nearly 15 to 18th

of March gold guinea went down, on the same time gold main was in bullishmood. This high volatility may be caused by number of factors but some core pricing drivers are

as follows.

An under supply of newly-mined gold. Gordon Brown striking out on his IMF gold sales proposal, with the US opposing it. The Washington Agreement supporting gold by being generally against excessive Central

Bank gold sales.

The real possibility of Asian countries buying whatever gold the European CentralBanks dish up.

The never-ending story of the US trade deficit. Gold is a "de facto currency" and therefore not subject to demand deficiencies caused by

world wide economic slowdowns.

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Gold is an inflation fighter and they can see stagflation approaching. Now-a-days dollar is weakening day by day against other major currencies . India

therefore purchased 200 metric tones of gold recently. Other countries also likely to take

similar decision.

Prices have moved sharper than it should have. It just because speculators moved it up upand up. Hence prices are expected to come down at faster space which happened in last

few days just after Fed cut rate by 75 basis points.

The situation in Libya, it seems quite bad and we see the flow of funds into safe -haveninvestment because of it, In addition to oil prices, other commodity that jumped due to

crisis of Libya is gold. This precious metal prices jumped to 1% became U.S. $ 1,400 per

ounce. Investors are competing to divert their investment to a safe place from inflation

like gold.

Every state in the world keeps its foreign reserves in the form of foreign currency i.e. $,Euro and pond. Gold is also taken as an asset in foreign reserve. Taking it as an asset was

a tradition, very popular in the past that declined after the surge in value of dollar.

Similarly the decline in the value of dollar gives rise to the demand of gold as a part of

foreign reserves.

Interpretation:-

As commonly, fluctuations in the guinea market show that trading turnover of gold guinea.

Gold main is probably show bearish only when international news spread out but gold guinea

is the one commodity which is quickly response to both the national as well as international

news. The most of the investor in gold guinea are big institutional investor so slight

movement of gold guinea takes into deeper clash down of market.

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A Year performance of gold guinea:-

The bullion market movement can analyze by throw understanding of drivers which make

volatile commodity market


March 2011 Contract Expiry Date:- 30t

April2011


May 2011

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Analysis of yearly performance of gold guinea:-

The price movement of gold guinea was followed the price of gold main. In the month

January the price of gold guinea is 16,000 but within the two month it was went up to Rs

17200.each gold guinea contract were moved in different way but all movement of this is

most similar movement of gold main, as compare to gold main it is more volatile due to

following factors.

Bank failuresWhen dollars were fully convertible into gold, both were regarded as money. However, most

people preferred to carry around paper banknotes rather than the somewhat heavier and less

divisible gold coins. If people feared their bank would fail, a bank run might have been the

result. This is what happened in the USA during the Great Depression of the 1930s, leading

Resident Roosevelt to impose a national emergency and to outlaw the ownership of gold by

US citizens.

Low or negative real interest rates.If the return on bonds, equities and real estate is not adequately compensating for risk and

inflation then the demand for gold and other alternative investments such as commodities

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increases. An example of this is the period of Stagflation that occurred during the 1970s and

which led to an economic bubble forming in precious metal.

Currency fluctuationAs gold is pegged to the US dollar, it has an inverse relationship with the dollar. Right now

with US being in great financial turmoil, the dollar has weakened against many other

currencies. Dollar is expected to weaken further and prices of gold are expected to rise

further. Dollar is a de-facto currency of exchange around the world. But now with US on the

brink of depression, gold is substituted as a safe haven for investments. Though dollar seems

to be getting stronger, it may be a temporary effect and very soon it can head southwards

once again, in turn making gold an attractive and safe investment

Higher inflation expectationRegulators have pumped in huge amount of liquidity to avert recessions. During the political

meeting held in London recently it was restated that G-20 countries intend to maintain loose

money policies unit economies recover clearly. The rising inflation expectation benefits gold

as gold is seen as a good hedge against inflation.

War, invasion, looting, crisis

In times of national crisis people fear that their assets may be seized and that the currencymay become worthless. They see gold as a solid asset which will always buy food or

transportation. Thus in times of great uncertainty, particularly when war is feared, the

demand for gold rises.

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Gloomy US dollar outlookGold is traded in US dollar term but major consumption of goldis outside US. Hence weakening US dollars makes gold cheaper for Non- US investors and

thereby increases demand for gold.

Increase in investment demandGold has limited statistical correlation with any of the assets classes as factors driving gold

prices are different from factors driving other markets. Hence gold acts as an excellent

portfolio diversifier. The average share of gold in global portfolios is quite low and given the

present fundamental setup it is undoubtedly going to go up, leading to higher gold demand.

Again gold prices have exhibited astonishing performance during recent financial turmoil and

that has managed to attract lot of investors attention. Such investors are investing in gold byway of exchange traded products and physical gold bars and coins.

Interpretation:-

Gold guinea is the mid way between the gold main and gold mini, so its volatility is

influenced by the enormous factors. The price of gold guinea will go up suddenly due to

national and international events and here sentiment of investor play a major role .

Gold Mini:

Gold is the oldest precious metal known to man and for thousands of years it has been valued as

a global currency, a commodity, an investment and simply an object of beauty.

Monthly trading chart of gold mini:-

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Contract Expiry Date:- 5t april 2011 Contract Expiry Date:- 5

t may 2011

Contract Expiry Date:- 4th June 2011

Analysis of monthly performance of Gold Mini:-

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Investment in the Gold mini gives us a confidential return with high volatility, from above chart

we can clearly understand the price of gold mini is come down (20950 to20000),as compare to

gold and gold guinea ,gold mini is moving in reverse manner, the reason for that is as follows.

World oil price hikes will trigger inflation, which is currently a major concern of globalinvestors.

Rising demand of gold jewellery. The investments in gold are influenced by comparative returns from other markets like

stock markets real estate other commodities like crude oil.

Domestically, demand and consequently prices to some extent are influenced by seasonalfactors like marriages. The rural demand is influenced by monsoon, agricultural output

and health of the rural economy.

price of gold is mainly affected by changes in sentiment, rather than changes in annualproduction.

It's a natural hedge against the US dollar. It traded predominantly between $420 and $435 this year, thus setting a new price floor,

which is considered a "strong buy signal.

There are signs of inflation in the coming year or so, and again gold has been thecommodity that people have tended use to act as a hedge against gold

The primary factors include the value of your country's currency and other currenciesaround the world. The lack of confidence in the Euro is one reason why gold is going up

now. Another factor is the overall confidence in the world economy.

Interpretation:-

The last month performance of gold mini is not so satisfactory, gold mini was in bearish

movement. The main reason for difference in movement of gold, gold guinea and gold mini is

the pattern of investment by institution and individual. The individual investors are invest more

in gold mini and their sentiment play vital role in market movement.

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A year performance of gold mini:-

Contract Expiry Date:- 5th April 2011 yearly Contract Expiry Date:- 5th May 2011

Contract Expiry Date:- 30

th

jun2011

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Analysis of yearly performance of gold mini:-

The present contract which is trading in bullion market shows a high volatility, In January the

price of gold mini is Rs 20,600 but after two month the price is same. so we can say gold mini

has high short term fluctuation. Some of reason for this fluctuation is as follows

UK inflation has now out-run the Bank of England's official upper tolerance of 3.0% peryear for 13 months running on the Consumer Price Index.

India is a country of contrasts where lavish palaces are mixed with shacks. Poorerlayers of population prefer to keep their valuable assets in the form of gold jewelry so it can be

easily carried in times of distress, floods and social unrest.

Worlds overall economic situation is a very important factor influencing gold prices inIndia. With many European countries being on the brink of bankruptcy like Greece, for example,

or facing huge state budget deficits, multiple investors see gold as the only worthy commodity

worth investing. If the worlds gold price is on the rise, it automatically affects Indian price for

gold.

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India is also worlds largest importer of gold from other countries. Rising or loweringimport costs inadvertently affect gold price in India today.

Rising population in India triggers even higher demand for gold driving gold price inIndia today even higher.

India is known to be a country of parallel economy, money laundering and large scale taxevasions. Since this unaccounted money cannot be kept in banks and the value of national

currency is on the downfall, Indians prefer to buy gold jewelry or gold bullions to protect them

from devaluation.

Interpretation:-

From last 12 month performance of Gold mini is quit critical to analysis, even though bullion

market was in up word trend gold mini is not supporting to movement especially from the last

six moth it has same price with little volatility so we can say the investor of gold mini are try to

hold and they expect long term profit.

Silver performance during 2010:-

When it comes to silver also, India is the worlds #1 consumer as well. And it can be seen from

imports figure which are up sharply in 2010, nearing 30-year peaks. All such factors shows that

in spite of such high prices from these countries will continue to climb up, taking bullion prices

to their new highs in 2011. While both the gold and silver are set to rise further owing to

continued currency devaluation and enhancing physical demand, Silver is likely to out perform

gold, in our view.Silver prices is reasonably tracks gold and are more volatile than the yellow

metal.

LIFE TIME

HIGH

LIFE TIME

LOW

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COMMODITY EXCHANGE 2010 HIGH 2010 LOW

SILVER

MCX

COMEX

45735.00

5035.00

7551.00

194.50

45735.00

3069.00

23610.00

1482.30

However, silver is also dependent on industrial growth, and therefore, price advance may be

limited if the global economic recovery is perceived to have stalled. Moreover, the nation has

received abundant monsoon in 2010, which is likely to result in abundant harvesting and rising

agricultural income. Silver is expected to see higher demand from rural India in medium term.

Silver is also likely to attract greater attention from the fund community; particularly in the US.

Owing to its out performance, the white metal is likely to receive more importance than gold.

The worlds largest silver-backed exchange traded fund, ishares silver Trust said that its holdings

hit record at 10,941.34 tones by December 7, 2010. Such strong fundamentals clearly shows us

that there is still a long way to go for bullion in coming period as current economical

environment is igniting up the heat in this counter.

Present performance of silver (2011):-

The silver is famously called poor mans gold, due to recovery of economy from great

depression of 2007-08 silver performed well. These days enormous use of silver for different

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purposes from manufacturing to pharmaceutical industry made to silver hit 32 year hike in their

price.

Last month performance of silver:-

Performance of silver is affected by various price drivers , the presently silver hits the 36 year

records the reason for that level hike can be understand by analyzing the present performance of

silver.

Contract Expiry Date:- 5t

May 2011 Contract Expiry Date:- 5t

Jul2011

Contract Expiry Date:- 5th

Sep 2011

Analysis of last month performance of silver:-

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The silver is increasing continuously from last few months due to various reasons, some of them

are as follows

Market demand for silver and gold is good, particularly industrial demand for Silver, butthis is not enough to absorb all the supply, so that leaves the rest down to investor

demand.

Players have been joining in, and holdings of silver stock, the popular way for retailinvestors to participate, rose 59.9 tons Thursday, the biggest single inflow since late

January. On the same day, holdings of Silver jumped 42 ton to another record at 15,554

tons.

After a weak January, prices of the precious metals rose in February when the unrest thattoppled governments in Tunisia and then Egypt sent players to havens.

Retail investors are showing particular interest in Silver coins in many countries,including the US.

Last month the Utah State Legislature passed a bill accepting US Gold and Silver coinsas legal tender and other States in the USA are considering similar legislation in a direct

rebuke to the Federal Reserve and its ultra-loose monetary policy.

Silver is more likely to follow gold higher, than base metals lower over the next year.Interpretation:-

The present contract of silver performing well in the market, mainly because of increasing the

silver use in various industries. The foreign market also in bullish trend that influencing

performance of silver directly in the India. last month silver outperforming gold.

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A year performance of silver:-

The current performance of silver is shown by below chart


may 2011 Contract Expiry Date:- 5t

jul2011

Contract Expiry Date: - 5th

Sep 2011

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Analysis of last year performance of silver:-

In the beginning of the year silver has slow movement after first month of this year silver start to

show bullish trend continuously and now it is in Peak of market even gold also not performing

like silver.

Demand for silver from new sources like the solar energy, medical and water purificationsectors is likely to quadruple in the next 10 years

Part of the reason for this is that such an uptick in industrial demand, which has wanedsignificantly as the photographic industry has used less and less of the metal, would result

in a decrease in the current metal surplus.

TheSilver Bookexplains, "For years the silver market has been characterized by fallingdemand in the photographic industry and tepid jewellery offtake, while supply has seen

rapid growth. The resulting market surplus has thus risen from 1,800t in 2000 to an

estimated 7,200t in 2010."

As the Silver Book says, "Investment demand has soared since the launch of the firstsilver-backed ETF in 2009, and now accounts for more than 400 Moz (12,440t) of silver

held in bullion bank vaults. Physical investment in the form of coins and bars has also

helped support prices in the face of this explosive growth in supply".

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The primary reason for our bullish outlook on silver is due to the continuing & increasingglobal macroeconomics, currency & geopolitical risks; silver historic role as money & a

store of value; the declining & very small supply of silver; significant industrial demand

& perhaps most importantly significant & increasing investment demand.

Interpretation:-

The current performance of the silver in the market is unpredictable; the market is moving

rapid bullish so the future trend of market will be bearish because equity market is in upward

but as compare to inflation rate the market will continue in the same order as before so the

prediction of silver movement is quite difficult.

Silver Mini

Silver's unique properties make it a very useful 'Industrial Commodity', despite it being classed

as a precious metal. Demand for silver is built on three main pillars; industrial uses, photography

and Jewellery.

Last month performance of silver mini:-

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April 2011 Contract Expiry Date:- 30t

June2011


august 2011 Contract Expiry Date:- 30t Nov2011

Analysis of last month performance of silver Mini:-

As compare to silver main, silver mini has high volatility this is mainly because of its

volume traded and market fluctuation factors they are as follows:-

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The Rapid hike in the silver price due to the some of more new silver consumingtechnologies would seek to substitute the metal with cheaper products.

The unrest in the economy like continuous increasing the inflation rate, hike of oil price,commodity market boom also make upward movement of silver mini.

The situation in Libya, it seems quite bad and we see the flow of funds into safe-haveninvestment because of it. So it automatically reflect in silver market.

There are lot of scams happened in India like 2G scam, due this investor moved fromequity market to commodity market.

Silver is known as the 'healthy metal' and has many and increasing medical applications.Research is ongoing on the use of silver and its compounds for therapeutic uses and on its

potential use as a disinfectant in hospitals and other medical facilities.

The Supply/Demand dynamics for gold and silver are vastly different. The practicaldemand for silver relative to the supply of silver is much greater than that of gold.

Unlike gold, silver is like oil - as it is consumed in these many industrial applications it isgone forever.

Net government sales of silver rose to 44.8 Moz, primarily the result of increased salesfrom Russia, with China and India in the beginning of 2011. That gave a leverage tosilver market.

Interpretation:-

The last month (Feb-March) silver mini shows a positive sign of growth with little volatility.

Sudden shift of market from 53000 to 57000 during mid March gave new history in the

bullion market that is 36 year hike in the silver market. So by considering the present silver

market and future demand prospect we can say silver mini will continue in bullish trend for

some more months.

A year performance of Silver Mini

The last year market performance of silver mini can be analyzed by studying performance

chart of silver Mini

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April 2011 Contract Expiry Date:- 30t

June2011


August 2011 Contract Expiry Date:- 30t

Nov 2011

Analysis of a year performance of silver Mini

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There was a tremendous growth in the silver performance as compare to last year, at end of

2010 the silver price was Rs 43,000 but in March 2011 it was gone up to Rs 56500.this rapid

increase of silver price is mainly due to following reason.

There has been a marked increase in investment demand for silver in recent years. Someof the reasons why this trend is likely to continue are - the introduction of ETFs that track

the price of silver, a new global liquidity bubble, the significant growth in the global

money supply, the proliferation of millionaires, ultra high net worth individuals and

billionaires, the proliferation of hedge funds and the exponential growth in derivatives.

The Bank for International Settlements has estimated that the total value of derivativescontracts was $592 trillion at the end of 2009 (up exponentially from $260 trillion in June

2008). Thus, dwarfing the GDP of the entire world which was estimated at some $78trillion at the end of 2010.

Silver is a hedge against macroeconomics, systematic & inflationary risk with theattractive added potential for significant capital gains. Real asset allocation & prudent

diversification would be an important reason to have an allocation to silver. Silver is

highly correlated to the safe haven of gold & is in effect a leveraged sister of the precious

white metal. Thus, informed investors use gold for wealth preservation & silver in order

to make a return.

Investors in silver bullion coins and bars are hedging themselves against further deflation

and falls in property and equity markets. They are further protecting themselves against

rising inflation, possible currency devaluations and still very prevalent geopolitical and

macroeconomic risks such those posed by the humongous global derivatives market.

According to the Silver Book, supply is expected to increase at a CAGR of around 2.4%over the next ten years, from more than 22,000t in 2009 to more than 28,500t in 2020, so

keeping supply running well ahead of potential demand could be a very tall order."

Silver posted an average price of $20.19 in 2010, a level only surpassed in 1980, and amarked increase over the $14.67 average price in 2009. This buoyancy is very much alive

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today, with the 2011 price averaging $31.86, based on the London fix, through the end of

the first quarter.

A significant boost in retail silver investment demand paved the way for higherinvestment in both physical bullion bars and in coins and medals in 2010. Physical

bullion bars accounted for 55.6 Moz of the world investment total last year. Coins and

medals fabrication rose by 28 percent to post a new record of 101.3 Moz. In the United

States, over 34.6 million U.S. Silver Eagle coins were minted, smashing the previous

record set in 2009 at almost 29 million. Other key silver bullion coins reaching

milestones include the Australian Kookaburra, the Austrian Philharmoniker, and the

Canadian Maple Leafall three posting record highs in 2010.

Interpretation:-

By analyzing the present trading contract performance, we can say silver market is in

bullish but by comparing all contract each other we can understand that contract which

has expiry date on November has high volatility that shows the future trend of silver will

be unpredictable. Even though the present movement will continue for some more

months but the end of year we can expect the price band of silver mini will be in Rs

55000 to 60000.

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